CCH Outlines Where to Claim Deductions Not Listed on the 1040
and How to Claim the Phone Tax Refund

If you thought that the instructions for
assembling a holiday gadget in December were daunting, just wait until you
tackle the Form 1040 at tax time, according to CCH, a Wolters Kluwer
business and a leading provider of tax and accounting information,
software and services (CCHGroup.com). Thanks to last-minute tax changes
enacted as part of the Tax Relief and Health Care Act of 2006, you may
find the instructions for the Form 1040 tax return more challenging than
ever. The Act, which includes $45.1 billion in tax benefits and adds over
200 changes to the tax code, means that millions of Americans can save
money on their taxes for 2006 and beyond, but only if they know where to
look. That's because this year's tax forms and first round of
instructions were printed well before the president signed the bill into
law on December 20, 2006.

"There is no such thing as a recall
on a tax form -- at least not so far," said David Bergstein, CPA, an
analyst for CCH CompleteTax ( http://www.completetax.com/ ), an
online tax program for the do-it-yourself tax filer. "But this may be
the last straw for some of the more than 20 million Americans that still
file their returns manually."
For the rest of the individual
filers who either file using an online or software-based tax program, or
rely on a professional tax preparer, it shouldn't be that difficult as
the complexity is left up to the program or the preparer to sort
out.

"The online tax program should walk you through a series
of questions and, based on your answers, it will make the required
calculations and populate the appropriate lines on the necessary
forms," said Bergstein, adding that, similarly, a tax preparer will
generally provide you with a question-and- answer organizer form to fill
out so that he or she can gather most if not all of the relevant
information necessary to be able to properly prepare your tax
return.

That said, individuals should be aware of what the general
tax law changes are that could affect their tax situation, for good or
bad, and have an idea of how this will be reported on their tax return.
So, among the changes that will require special treatment as taxpayers
fill out or review their Form 1040 are changes allowing a deduction for
state and local sales tax, a higher education tuition deduction and
teacher's classroom expense deduction.

Additionally, the IRS is
offering a one-time refund to taxpayers for telephone excise taxes charged
between 2003 and 2006. The refund is claimed on the Form 1040 and a
special 1040 has been created for individuals who are not required to file
a tax return.

Below, CCH provides an overview of these tax law
changes and where taxpayers should claim the credit or deduction on their
2006 Form 1040 and accompanying forms.

Claiming Extended
Deductions on Form 1040

State and Local Sales Tax
Deduction

Under the American Jobs Creation Act of 2004, taxpayers
were allowed to deduct either state and local income taxes or state and
local sales taxes as an itemized deduction on their federal tax return.
This deduction proved extremely popular among residents of the nine states
that do not have a broad- base income tax (Alaska, Florida, Nevada, New
Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming), thus
its reinstatement as part of the Tax Relief and Health Care Act of
2006.

Taxpayers can calculate their deduction by saving their
actual receipts or they can use the Optional State Sales Tax Tables in IRS
publication 600. Taxpayers choosing to take the state and local sales tax
deduction must claim it on Schedule A, by entering the letters
"ST" on line 5 of Schedule A, which they should then file along
with their Form 1040.

In the printed instructions for Schedule A,
which is used for figuring out your deductions, it states that you can no
longer deduct state and local general sales taxes instead of state and
local income tax. However, the instructions were printed before the Tax
Relief and Health Care Act of 2006 extended the sales tax
deduction.

"This could be confusing because it appears in the
'what's new for 2006' section of the instructions, so some individuals
may interpret it as being most current," said Bergstein. "The
section also notes, however, that at the time the instructions were going
to press, Congress was considering legislation to extend the
deduction."

Higher Education Tuition Deduction

The
above-the-line deduction for higher education tuition has been extended
through 2007, as well. For both 2006 and 2007, a $4,000 above-the- line
deduction is available each year to joint filers with adjusted gross
incomes (AGI) of $130,000 or less ($65,000 or less for single filers).
Joint filers making more than $130,000 but not exceeding $160,000 (more
than $65,000 but not exceeding $80,000 for single filers) can take a
$2,000 deduction in each 2006 and 2007. The deduction only applies to
higher education tuition and qualifying fees, and any taxpayer taking the
above-the-line higher education tuition deduction cannot also claim the
Hope credit (a credit of up to $1,650 for qualifying taxpayers) or
Lifetime Learning credit (a credit of up to $2,000 per tax return for
qualifying taxpayers) for the same student.

To claim the higher
education deduction, a taxpayer needs to use line 35 of the Form 1040,
which is designated for the domestic production activities deduction.
Taxpayers claiming the higher education deduction should include the
letter "T" on this line. Taxpayers claming both the education
deduction and the domestic production activities deduction, should include
the letter "B" on line 35 and attach a separate statement
explaining both deductions.

Teacher's Classroom Expense
Deduction

While a $250 deduction may not be a lot considering how
much some teachers spend of their own money on classroom supplies, it does
at least help and recognizes that teachers are providing this support.
This deduction, which was claimed by more than 3 million educators in 2005
was set to expire at the end of 2005, but has now been extended for 2006
and 2007. Educators who work at least 900 hours during the school year
with students in kindergarten through grade 12 can take the
deduction.

To claim the deduction, taxpayers need to use line 23 of
the Form 1040, which is designated for the Archer MSA deduction. Taxpayers
claiming the educator deduction should include the letter "E" on
this line. Taxpayers claming both the educator deduction and the Archer
MSA deduction, should include the letter "B" on line 23 and
attach a separate statement explaining both deductions.

Telephone
Excise Tax Reprieve: Even for Those Who Don't File a Tax Return

In
May 2006, the IRS announced that amounts paid for time-only (instead of
distance) toll telephone service are not subject to excise tax. All
taxpayers who paid this tax are eligible for refunds for the tax paid on
services billed after February 28, 2003 and before August 1,
2006.

Taxpayers have two options for calculating their refund. The
first is to request a refund based on the actual excise tax paid during
this time period subject to IRS limitations, but this is only an option
for taxpayers who have kept their telephone bills and can, therefore,
prove how much they've paid. The other option is to claim a
"standard amount" refund. The standard amount is based on the
number of personal exemptions claimed ($30 for one exemption, $40 for two,
$50 for three and $60 for four or more).

Taxpayers claim the refund
on line 71 -- Credit for federal telephone excise tax paid -- of the 2006
Form 1040. Those claiming the standard amount need only fill in line 71,
while those requesting refund of the actual amount will need to attach
Form 8913 -- Credit for federal telephone excise tax paid -- showing the
calculation. Businesses claiming a refund must also use this
form.

Taxpayers not required to file a tax return can use a new
form -- Form 1040EZ-T -- to claim the standard amount
refund.

Making Amends: What to Do If You Missed a Deduction or
Refund

Taxpayers using online tax software or professional tax
preparers have little chance of missing any of the deductions or refunds
they're owed. However, for the die-hard pencil and paper set, there is
always the option of filing an amended return if they do overlook any of
the new deductions.

In fact, forgotten deductions are among the
most common reasons for filing Form 1040X.

"Taxpayers can file
an amended return to correct a mistake or to claim a refund. The Form
1040X must be received within three years after the date you filed your
original return or within two years after the date you paid the tax,
whichever is later," said Bergstein. "If you are going to file
an amended return it is best to consult with a tax
advisor."

About CCH CompleteTax

CCH CompleteTax, an
online tax preparation and e-filing service for the do-it-yourself
taxpayer, continues to set the standard when it comes to making online tax
prep and e-filing easy, efficient and affordable. CompleteTax offers
comprehensive support to help taxpayers through each step and allows them
to prepare and e-file a federal income tax return for just $25.95 and a
state income tax return for $12.95. Taxpayers can try before they buy, as
CompleteTax does not require payment until a return is ready to be e-filed
or printed and mailed.

About CCH, a Wolters Kluwer
business

CCH, a Wolters Kluwer business (CCHGroup.com) is a leading
provider of tax and accounting law information, software and services. It
has served tax, accounting and business professionals and their clients
since 1913. Among its market-leading products are The ProSystem fx(R)
Office, CCH(R) Tax Research NetWork(TM), Accounting Research Manager(R)
and the U.S. Master Tax Guide(R). CCH is based in Riverwoods,
Ill.

Wolters Kluwer is a leading global information services and
publishing company. The company provides products and services for
professionals in the health, tax, accounting, corporate, financial
services, legal and regulatory, and education sectors. Wolters Kluwer has
annual revenues (2005) of euro 3.4 billion, employs approximately 18,400
people worldwide and maintains operations across Europe, North America,
and Asia Pacific. Wolters Kluwer is headquartered in Amsterdam, the
Netherlands. Its shares are quoted on the Euronext Amsterdam (WKL) and are
included in the AEX and Euronext 100 indices. For more information, visit
http://www.wolterskluwer.com/
.

We are a tax and accounting firm in Huntsville Alabama with a strong focus on helping small businesses reduce cost associated with taxes and to assist individual maximize their tax return. Some of the accounting and tax areas in which we are profficient includes, payroll taxes, quaterly and yearly reports, estimated tax, Late Filers, financial statements, income tax return and payroll processing and general bookkeeping. We are familiar with Peachtree, Quicken, CMS and Quickbook.